Wednesday night from Governor Davis: "Fifty-one percent ($17.7 billion) of this [deficit] problem is a reduction in revenues based on predictions in our current budget. Thirty-six percent ($12.6 billion) of the problem are the one-time reductions that we used last year to solve that problem. Twelve-point-five percent ($4.5 billion) are increased expenditures.
As you well know, we have a very progressive system in this state - 80% of our revenues come from 10% of the tax earners. So, we depend heavily on the well-being of highly compensated Californians. .From 1995 to 2000 these taxpayers experienced an increase in what they were providing state government on the order of about 18% in '95, '96, '97, and '98, and then it shot up in '99 to about 25%, and a little higher in 2000. In 2001, they actually dropped down to zero - so there was a dramatic falloff in 2001. And 2002 they are down about 3%... But when you have a very progressive tax system - which basically exempts everyone from taxes making up to $45,000 a year - and depend heavily on the performance of the top ten percent of your wage earners, then you run the risk that, if they do badly, services have to be reduced and there's not the revenue for other things we'd like to do in government. So, if there is one single problem that has caused this problem, this is it. http://www.prudentbear.com/creditbubblebulletin.asp
